Face value is $1,000.
Bond price = 1.0325 x 1000 = 1 032.5.
Amount in dollars = 1,032.5*3
$3,097.5 in dollars.
Bonds are contracts for debt that mandate a certain amount of interest be paid by the borrower to the lender. The cost that a buyer would have to pay another investor to acquire the bond is its value. Bond valuation is the process of estimating the bond's fair market value based on variables including interest rates, bond payments, and timeframes.
One of the most popular techniques for valuing a bond is the discounted cash flow method. This approach involves discounting the bond's cash flows (such as the coupon and par value) at the market rate. Afterward, the bond's value is calculated by adding the present values of all the cash flows.
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